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Title: |
Share Purchase Agreement |
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Entities: |
Boston Acoustics, Inc.; Global Technovations, Inc.; Ice Miller |
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Date: |
2000 |
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$91 |
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#885387 |
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<SEQUENCE>18
<FILENAME>0018.txt
<DESCRIPTION>SHARE PURCHASE AGREEMENT WITH SCHEDULES
<TEXT>
SHARE PURCHASE AGREEMENT
By and Among
ONKYO EUROPE ELECTRONICS GMBH
ONKYO MALAYSIA SDN. BHD.
ONKYO CORPORATION
and
GLOBAL TECHNOVATIONS, INC.
and
ONKYO AMERICA, INC.
Dated as of June 29, 2000
<PAGE>
SHARE PURCHASE AGREEMENT
This SHARE PURCHASE AGREEMENT has been entered into as of June 29, 2000 by
and among ONKYO EUROPE ELECTRONICS GMBH, a German corporation, ONKYO MALAYSIA
SDN. BHD., a Malaysian corporation, ONKYO CORPORATION, a Japanese corporation
(individually referred to as the "Seller" and collectively referred to as the
"Sellers"); and GLOBAL TECHNOVATIONS, INC., a Delaware corporation (the "Buyer")
and ONKYO AMERICA, INC., an Indiana corporation ("Onkyo America").
ARTICLE I
RECITALS
(1) Onkyo America is a manufacturer and supplier of high quality
audio speakers (hereinafter referred to as the "Business").
(2) The authorized capital stock of Onkyo America consists of
9,000 common shares and 1,000 preferred shares. 5,900 shares of common
stock and 100 preferred shares are issued and outstanding.
(3) Of the 5,900 authorized, issued and outstanding Onkyo America
common shares, ONKYO CORPORATION owns of record and beneficially 1,770
common shares; ONKYO MALAYSIA SDN. BHD. owns of record and
beneficially 2,065 common shares; and ONKYO EUROPE ELECTRONICS GMBH
owns of record and beneficially 2,065 common shares. The Buyer,
formerly named Top Source Technologies, Inc., owns all of the 100
issued and outstanding preferred shares, which are contingently
convertible (subject to adjustment) into 151.27 new issue common
shares of Onkyo America.
(4) ONKYO CORPORATION owns a controlling interest in the capital
stock of ONKYO EUROPE ELECTRONICS GMBH and ONKYO MALAYSIA SDN. BHD.
(5) The Buyer, in reliance upon the representations, warranties
and covenants of the Sellers set forth herein, desires to purchase all
(but not less than all) of the 5,900 Onkyo America shares owned by the
Sellers (the "Purchased Shares") and the Sellers desire to sell,
transfer and convey their Purchased Shares to the Buyer at Closing on
the terms and conditions set forth in this Agreement.
(6) The Sellers, in order to induce the Buyer to execute and
deliver this Agreement and to purchase the Purchased Shares from
the Sellers and consummate the other transactions contemplated hereby
and as an essential element hereof, desire to enter into certain
covenants with the Buyer in order to protect the goodwill of Onkyo
America from certain competitive and other activities.
(7) Capitalized terms used herein shall have the meanings set
forth in Article II. ----------
In consideration of the covenants, representations, warranties, and
mutual agreements herein contained, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Buyer, Onkyo
America and the Sellers hereby agree as follows:
ARTICLE II
DEFINITIONS
As used in this Agreement, the following capitalized words and terms
have the meanings indicated below:
"Adverse Claim" has the meaning contained in Section 8.1-102 of the
Indiana Uniform Commercial Code.
"Agreement" shall mean this Share Purchase Agreement, by and among the
Buyer and the Sellers, dated June 29, 2000 as amended or modified from time to
time in accordance with the applicable provisions hereof.
"Balance Sheet Date" has the meaning specified in Section 5.05.
"Business" has the meaning specified in the Recitals hereto.
"Buyer" has the meaning specified in the first paragraph of this
Agreement.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liabilities Act of 1980, as amended.
"Claim" or "Claims" has the meaning specified in Section 12.01.
"Closing" has the meaning specified in Article IV.
"Closing Date" has the meaning specified in Article IV.
"Code" means the Internal Revenue Code of 1986, as amended, and the
regulations thereunder.
"Computer Software" means all computer source codes, object codes,
programs, data files, and other software (including both applications software
and operating software), including all machine readable code, printed listings
of code documentation, and related property and information relating to the
Business, including licenses and other rights to use Computer Software of third
parties.
"Counsel for the Buyer" or the "Buyer's Counsel" shall mean Michael
Harris, P.A.
"Counsel for the Sellers" or the "Sellers' Counsel" shall mean Akai Law
Offices.
"Earn-Out Payment" or "Earn-Out Payments" shall mean the payments to be
made pursuant to Schedule 3.02(b).
"Earn-Out Formula" shall mean the formula used to calculate the
Earn-Out Payments set forth in Schedule 3.02 (b).
"EBITDA" shall mean Onkyo America's income after crediting all
management or other fees paid to the Buyer and before all interest, federal,
state and other income taxes, interest, depreciation and amortization computed
in accordance with GAAP.
"Employee Plans" has the meaning specified in Section 5.17(a).
"Employee Pension Benefit Plan" has the meaning specified in Section
5.17(a).
"Employee Welfare Benefit Plan" has the meaning specified in Section
5.17(a).
"Environmental Claims" means all accusations, allegations,
investigations, warnings, notice letters, notices of violations, Liens, orders,
Claims, demands, suits or administrative or judicial actions for any injunctive
relief, fines, penalties, or any damage, including without limitation personal
injury, property damage (including any depreciation of property values), lost
use of property, natural resource damages, or environmental response costs
arising out of Environmental Conditions or under Environmental Requirements.
"Environmental Conditions" means the state of the environment,
including natural resources (e.g., flora and fauna), soil, surface water, ground
water, any present or potential drinking water supply, subsurface strata or
ambient air, relating to or arising out of the use, handling, storage,
treatment, recycling, generation, transportation, spilling, leaking, pumping,
pouring, injecting, emptying, discharging, emitting, escaping, leaching,
dumping, disposal, release, or threatened release of Hazardous Materials,
whether or not yet discovered which could or does result in Environmental
Claims. With respect to Environmental Claims by third parties, Environmental
Conditions also include the exposure of persons to Hazardous Materials at the
work place or the exposure of persons or property to Hazardous Materials
migrating or otherwise emanating from, to, or located at, under, or on the Owned
Premises and/or Leased Real Property.
"Environmental Expenses" means any liability (including strict liability),
loss, cost, penalty, fine, punitive damages, encumbrance, or expense relating to
any Environmental Claim or Environmental Conditions, or incurred in compliance
with any Environmental Requirements, including without limitation the costs of
investigation, cleanup, remedial, monitoring, corrective, or other responsive
action, compliance costs, settlement costs, lost property value, and related
legal and consulting fees and expenses.
"Environmental Requirements" means all present and future laws, rules,
regulations, ordinances, codes, policies, guidance documents, approvals, plans,
authorizations, licenses, permits issued by all government agencies,
departments, commissions, boards, bureaus, or instrumentalities of the United
States, all states and political subdivisions thereof, and any foreign
government body, and all judicial, administrative, and regulatory decrees,
judgments, and orders relating to human health, pollution, or protection of the
environment (including ambient air, surface water, ground water, land surface,
or surface strata), including (i) laws relating to emissions, discharges,
releases, or threatened releases of Hazardous Materials, and (ii) laws relating
to the identification, generation, manufacture, processing, distribution, use,
treatment, storage, disposal, recovery, transport, or other handling of
Hazardous Materials, (iii) CERCLA, the Toxic Substances Control Act, as amended,
the Hazardous Materials Transportation Act, as amended, RCRA, the Clean Water
Act, as amended, the Safe Drinking Water Act, as amended, the Clean Air Act, as
amended, the Atomic Energy Act of 1954, as amended and the Occupational Safety
and Health Act, as amended; and (iv) all analogous laws promulgated or issued by
any federal, state, or other governmental authority or foreign governmental
body.
"Equipment and Machinery" means (i) all personal property owned by
Onkyo America, including without limitation the equipment, machinery, furniture,
fixtures and improvements, computer hardware, tooling, spare parts, supplies,
and vehicles owned or leased by Onkyo America (including all leases of such
property), (ii) any rights of Onkyo America to warranties applicable to the
foregoing (to the extent assignable), and licenses received from manufacturers
and the Sellers of any such item, and (iii) any related Claims, credits, and
rights of recovery with respect thereto.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations promulgated thereunder.
"Europe" shall mean Ireland, United Kingdom, Portugal, France, Spain,
Netherlands, Germany, Belgium, Luxemburg, Switzerland, Italy, Norway, Sweden,
Finland, Austria, Poland and the Czech Republic, Russia, Hungary, Romania,
Bulgaria, Monaco and all other countries or principalities located in whole or
in part within the continent of Europe.
"Finished Products" means products into which speakers are incorporated
and that are ultimately sold or re-sold in substantially such form to consumers
or and users (including corporations or other entities for their own use).
"GAAP" means generally accepted accounting principles in the United
States, in effect from time to time, consistently applied.
"Government Entity" or "Government Entities" means any court,
government agency, department, commission, board, bureau or instrumentality of
the United States, any local, county, state or federal or political subdivision
thereof, or any foreign governmental body of any kind.
"Hazardous Materials" means (i) any substance that is or becomes
defined as a "hazardous substance," "hazardous waste," "hazardous materials,"
pollutant, or contaminant under any Environmental Requirements, including
CERCLA, SARA, RCRA, and any analogous federal, state, local or foreign law; (ii)
petroleum (including crude oil and any fraction thereof); and (iii) any natural
or synthetic gas (whether in liquid or gaseous state).
"Home Audio Products" means electronic home audio products, home
theater speakers and home stereo speakers.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"Indemnified Party" has the meaning specified in Section 12.03(a).
"Indemnifying Party" has the meaning specified in Section 12.03(a).
"Intellectual Property" means all United States and foreign patents and
patent applications (whether utility, design, or plant product), registered and
unregistered trademarks, service marks, trade names including the names "Onkyo
America", logos, brands, business identifiers, private labels, trade dress
(including all goodwill and reputation symbolized by any of the foregoing),
rights of publicity, processes, industrial designs, inventions, registered and
unregistered copyrights and copyright applications, product formulas, know-how,
trade secrets, confidential information that is not a trade secret, and Computer
Software, and all rights with respect to the foregoing, and all other
proprietary rights that Onkyo America or any of the Sellers owns, licenses, or
possesses the right to use in the conduct of the Business.
"Interim Financial Statements" has the meaning specified in Section
5.05.
"Law" means any local, county, state, federal, foreign or other law,
statute, regulation, ordinance, rule, order, decree, judgment, consent degree,
settlement agreement or governmental requirement enacted, promulgated, entered
into, or imposed by a Governmental Entity.
"Leased Real Property" has the meaning specified in Section 5.12.
"Lien" or "Liens" means any mortgage, pledge, security interest,
encumbrance, lien (statutory or other), option, easement, right-of-way, charge,
or conditional sale agreement.
"Material Contracts" means all contracts, agreements, and other
arrangements, whether oral or written, to which Onkyo America is a party as to
which the breach, non-performance, failure to renew, or cancellation could have
a Material Adverse Effect on the Business, financial condition, assets,
operations, or future prospects of Onkyo America.
"Material Adverse Change" or "Material Adverse Effect," when used with
respect to the Sellers or the Buyer, means a material adverse change or material
adverse effect on the assets, operations, business, future prospects, or
financial condition of Onkyo America, as the case may be. In determining whether
a fact or failure to disclose a fact is material, the principles of Securities
and Exchange Commission Staff Accounting Bulletin 99 shall be applicable.
"Onkyo Group" shall mean Onkyo Japan and those other companies that
ONKYO CORPORATION owns, in whole or in part, but excludes Onkyo America.
"Onkyo Group Speakers" shall mean automotive speakers, office equipment
speakers, television speakers and telephone speakers manufactured or assembled
by or for a member of the Onkyo Group; provided, however, that Onkyo Group
Speakers shall not include (A) Home Audio Products and (B) any speakers
contained in Finished Products which are manufactured or assembled, outside the
Territory and delivered into the Territory.
"Ordinary Course of Business" or "Business in the Ordinary Course"
means the ordinary course of business for the business consistent with past
practices.
"Owned Premises" has the meaning specified in Section 5.11.
"Party" or "Parties" means the Sellers, Onkyo America and/or the
Buyer.
"Person" means any individual, corporation, partnership, joint venture,
association, limited liability company, joint-stock company, trust, or
unincorporated organization, or any governmental agency, officer, department,
commission, board, bureau, or instrumentality thereof.
"Personnel" of a Party means the officers, employees and/or agents of
that Party.
"Policy" and "Policies" have the meanings specified in Section 5.21.
"Proceedings" shall have the meaning specified in Section 5.15(b).
"Purchase Price" has the meaning specified in Section 3.02.
"Purchased Shares" has the meaning specified in the Recitals hereto.
"RCRA" means the Resource Conservation and Recovery Act, as amended.
"Real Property Leases" has the meaning specified in Section 5.12.
"SARA" means the Superfund Amendments and Reauthorization Act, as
amended.
"Seller" and "Sellers" has the meaning specified in the first paragraph of
this Agreement.
"Tax" or "Taxes" means all federal, state, local, or foreign taxes
(including excise taxes, occupancy taxes, environmental taxes, employment taxes,
unemployment taxes, ad valorem taxes, customs duties, transfer taxes, and fees),
levies, imposts, fees, impositions, assessments, registration, or other
governmental charges of any nature imposed upon a Person including all taxes or
governmental charges imposed upon any of the personal properties, real
properties, tangible or intangible assets, income, profits, receipts, payrolls,
transactions, stock transfers, capital stock, net worth or franchises of a
Person (including all sales, use, transfer, registration, value added,
alternative or add on minimum, estimated withholding or other taxes of any kind
whatsoever which a Person is required to collect and/or pay over to any
government), and all related additions to tax, penalties or interest thereon
whether or not disputed.
"Tax Returns" means any return, declaration, report, Claim for refund,
information return, or other document or amendment to any of the foregoing
(including any schedules, attachment related or supporting information) filed or
required to be filed with any governmental agency, department, commission,
board, bureau, or instrumentality in connection with the determination,
assessment, collection, or administration of any Taxes.
"Promissory Note" has the meaning set forth in Section 3.02(a)(ii).
ARTICLE III
PURCHASE AND SALE
Section 3.01. Purchase and Sale. Subject to the terms and conditions
herein set forth in this Agreement, on the Closing Date, ONKYO CORPORATION shall
sell its 1,770 Purchased Shares and ONKYO MALAYSIA SDN. BHD. shall sell its
2,065 Purchased Shares and ONKYO EUROPE ELECTRONICS GMBH shall sell its 2,065
Purchased Shares, and the Buyer shall purchase from the Sellers all (but not
less than all) of such Purchased Shares. The Purchased Shares are being sold,
assigned and transferred by the Sellers to the Buyer pursuant to the terms and
conditions of this Agreement, free and clear of all Liens, Adverse Claims or
other rights of any other Person.
Section 3.02. Purchase Price. The purchase price ("Purchase Price") to
be paid by the Buyer to the Sellers for their Purchased Shares shall be as
follows:
(a) $25,000,000 in United States dollars payable as follows:
(i) $17,000,000 by federal funds wire transfer on the Closing
Date as follows:
(A) $8,750,000 shall be paid to ONKYO MALAYSIA SDN. BHD. and;
(B) $8,250,000 shall be paid to ONKYO EUROPE ELECTRONICS GMBH;
and
(ii) a $7,500,000 promissory note payable to ONKYO CORPORATION and
a $500,000 promissory note payable to ONKYO EUROPE ELECTRONICS
GMBH (collectively the "Promissory Notes"), the form of which
is attached hereto as Exhibit 3.02 (a)(ii), which Promissory
Notes shall be payable in United States dollars. The
Promissory Notes shall accrue interest commencing on the
Closing Date at the United States Federal Funds rate as of the
Closing Date and shall provide for payment in two installments
on a pro-rata basis based upon the respective percentages of
the principal of each Promissory Note held by each Seller as
applicable. The first payment shall consist of principal in
the amount of $3,000,000 plus accrued interest from the
Closing Date and be paid on March 31, 2002. The second payment
shall consist of principal of $5,000,000 plus accrued interest
from the Closing Date and be paid on March 31, 2003.
(b) A contingent purchase price of up to $15,000,000 in United States
dollars representing additional Earn-Out Payments, based on the Earn-Out Formula
set forth in Schedule 3.02(b) derived from the EBITDA of Onkyo America for the
period from October 1, 2000 to September 30, 2005, which Earn-Out Payments shall
be paid to and allocated among the Sellers in proportion in their ownership of
the Purchased Shares as of the date of this Agreement. The Earn-Out Payment for
the period from October 1, 2000 to September 30, 2004 shall be paid to the
Sellers in a single payment on or before November 30, 2005, without interest,
and the Earn-Out Payment for the period from October 1, 2004 to September 30,
2005 shall be paid on December 30, 2005, without interest.
Section 3.03. Manner of Payment of Purchase Price. (a) The Buyer shall
transmit the amounts set forth in Section 3.02 by wire transfer or by such other
means as may be mutually agreed to by the Sellers and the Buyer at Closing.
Unless otherwise agreed, the Sellers shall provide the Buyer with wire transfer
instructions prior to Closing. In addition, at the Closing the Buyer shall issue
and deliver to ONKYO CORPORATION and ONKYO EUROPE ELECTRONICS GMBH the
Promissory Notes in the original principal amount of $7,500,000 and $500,000,
respectively.
ARTICLE IV
CLOSING
The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Ice Miller, Indianapolis, Indiana,
on July 31, 2000, or as soon as practicable thereafter, provided all the
conditions specified in Article VIII, IX and X have been satisfied or waived, or
at such other place and time, or on such other date, as may be mutually agreed
to by the Parties (the "Closing Date"). In conjunction with the Closing, Onkyo
America shall redeem the preferred shares owned by the Buyer for its original
purchase price and accrued dividends. At the Closing, the Buyer, Onkyo America,
and the Sellers shall deliver to each other updated Schedules dated as of a date
not more than two days prior to the Closing Date which Schedules shall be
contained in certificates signed by the Buyer, Onkyo America, or the Sellers, as
the case may be; provided, however that any representations and warranties made
by the Sellers with respect to such Schedules or any information contained
therein shall be made "to the knowledge of the Sellers" as that term is defined
in Section 5.27.
ARTICLE V
REPRESENTATIONS AND WARRANTIES ONKYO AMERICA AND OF THE SELLERS
As a material inducement to the Buyer to enter into this Agreement and
all other agreements and documents executed by the Buyer in connection with this
Agreement and to consummate the transactions contemplated hereby and such
related agreements, Onkyo America and the Sellers hereby jointly and severally
represent and warrant to the Buyer as follows, which representations and
warranties are true, correct and complete as of the date of this Agreement and
will be true, correct and complete as of the Closing Date (all representations
and warranties by the Sellers are "to the knowledge of the Sellers" as that term
is defined in Section 5.27):
Section 5.01. Title to Shares. Each Seller is the sole and exclusive
record and beneficial owner of that number of the Purchased Shares as is set
forth in Article I of this Agreement. The Sellers possess good and merchantable
title to the Purchased Shares, and own the Purchased Shares free and clear of
any and all Taxes, security interests, options, warrants, purchase right or
other contract or commitment that could require any of the Sellers to sell,
transfer, or otherwise dispose of any capital stock of any of the Sellers (other
than this Agreement), agreements, restrictions, Claims, Liens, pledges and
encumbrances of any nature or kind. The Sellers are not a party to any voting
trust, proxy or other agreement or understanding with respect to the voting of
any of the Purchased Shares. The Sellers have the absolute and unconditional
right to sell, assign, transfer and deliver the Purchased Shares to the Buyer in
accordance with the terms of this Agreement. No transfer or other Taxes shall be
included by the Buyer in connection with the acquisition of the Purchased
Shares.
Section 5.02. Authority of the Sellers; Validity of Agreement. The
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby by each Seller does not, and will not,
violate any provisions of the articles of incorporation or bylaws (or similar
documents) of the Sellers or Onkyo America, or violate any provision of, or
cause a default under, or result in the acceleration of any obligation under,
any agreement, instrument, lease, Lien, judgment, statute, Law, rule, or
regulation to which any of the Sellers or Onkyo America are a party, or by which
the Sellers or Onkyo America or the property of any Seller or Onkyo America may
be bound or affected, or conflict with or result in any breach of any of the
terms, conditions, or provisions of, or constitute a default (or give rise to
any right of termination), cancellation, or acceleration under, or result in the
creation of any Lien, security interest, charge, or encumbrance upon any of the
assets of Onkyo America under any note, indenture, mortgage, lease, agreement,
contract, purchase order, or other instrument or document to which Onkyo America
is a party or by which it or any of its assets is bound or affected, except as
set forth in Schedule 5.02 which shall be waived at or before Closing. Each of
the Sellers have the legal right and power to enter into this Agreement and to
carry out the transactions herein contemplated except for the agreements set
forth in Schedule 5.02 which shall be waived at or before Closing. This
Agreement, when executed, will constitute a legal, valid, and binding agreement
of the Sellers enforceable against the Sellers in accordance with its terms
subject only to any applicable bankruptcy, insolvency, or other Laws affecting
creditors' rights generally. The execution and delivery of this Agreement and
the performance of the Sellers' obligations hereunder have been duly authorized
by all necessary actions on the part of the Sellers and no other corporate or
other proceedings on the part of the Sellers are necessary to authorize their
execution, delivery, and performance. This Agreement has been duly executed and
delivered by the Sellers and constitutes their valid and binding obligation,
enforceable against each of them in accordance with its terms.
Section 5.03. Corporate Organization and Qualification. Onkyo America
is a corporation duly organized and validly standing under the Laws of the State
of Indiana. Each of Onkyo America and its subsidiary referred to in Section
5.08, are duly authorized to conduct business and in good standing under the
Laws of each jurisdiction where such qualification is required. Each of the
Sellers is duly organized and validly standing under the jurisdictions of its
organization. Except as specified on Schedule 5.03 attached hereto, Onkyo
America has all requisite corporate power and corporate authority and all
governmental licenses, authorizations, permits, consents and approvals to own,
lease and operate its properties and to carry on the Business conducted by and
in which it proposes to engage. Copies of Onkyo America's articles of
incorporation and bylaws, including all amendments thereto, have been provided
to the Buyer.
Section 5.04. Governmental Consents. Except as set forth on Schedule
5.04 attached hereto, no authorization, consent, approval exemption or other
action by or notice to or filing with any Person, or with any court or
administrative or governmental body is required to permit the Sellers to execute
and deliver this Agreement, to consummate the transactions contemplated by this
Agreement, to comply with and fulfill the terms and conditions of this
Agreement, or to sell the Purchased Shares to the Buyer.
Section 5.05. Financial Statements. Attached hereto as Schedule 5.05
are true and complete copies of (a) the audited balance sheets of Onkyo America
as of December 31, 1999, and the related statements of income, stockholders'
equity and cash flow for each of the three years in the period ended December
31, 1999, together with the notes thereto and the audit report thereon of
Deloitte & Touche, LLP, certified public accountants, and (b) the unaudited
balance sheet of Onkyo America as of April 30, 2000 ("Balance Sheet Date") and
statements of income, stockholders' equity and cash flow for the periods ended
April 30, 1999 and 2000 (the unaudited balance sheet, and statements of income,
stockholders' equity and cash flow are collectively referred to as the "Interim
Financial Statements"). All financial statements described by this Section 5.05
have been prepared in accordance with GAAP consistently applied throughout the
periods covered thereby (except that Interim Financial Statements may not
include footnote disclosures required by GAAP), are true and correct and present
fairly the financial position of Onkyo America as of the respective dates
thereof and the results of Onkyo America's operations, stockholders' equity and
cash flows for the periods then ended.
Section 5.06. Absence of Certain Changes or Events. Except as set forth
on Schedule 5.06, since the Balance Sheet Date, Onkyo America has operated its
Business in the Ordinary Course consistent with past practice and there has not
been any:
(a) Material Adverse Change in the assets, operations, business, prospects
or financial condition of Onkyo America;
(b) (i) increase in the compensation payable or to become payable to any
Personnel engaged in the Business of more than $25,000, (ii) bonus, incentive
compensation, service award or other like benefit granted, made, or accrued,
contingently or otherwise, for or to the credit of any Personnel engaged in the
Business of an amount which is more than $50,000, (iii) employee welfare,
pension, retirement, profit-sharing, or similar payment or arrangement made or
agreed to by Seller for any Personnel engaged in the Business other than in the
Ordinary Course of Business, or (iv) new employment agreement with any Personnel
engaged in the Business to which Seller is a Party;
(c) addition to or modification of the Employee Plans, arrangements, or
practices described in Schedule 5.17 or Section 5.20 other than (i) the
extension of coverage to other employees of Seller who became eligible after the
Balance Sheet Date, or (ii) changes required by law;
(d) sale, lease, assignment, or transfer outside of the Ordinary Course of
Business of any of the assets of Onkyo America material to the Business, singly
or in the aggregate;
(e) capital expenditure or the execution of any lease or any incurring of
liability therefor in connection with the Business involving payments in excess
of $50,000;
(f) failure to operate Onkyo America or the Business in the Ordinary Course
of Business or to preserve the Business intact, to keep available to the Buyer
the services of the Personnel and to preserve for the Buyer the goodwill of the
Sellers' suppliers, customers, and others having business relations with it,
except where such failure would not have a Material Adverse Effect;
(g) change in accounting methods or practices;
(h) damage, destruction, or loss (whether or not covered by insurance)
adversely affecting the Business or any the assets or properties of Onkyo
America;
(i) declaration, setting aside, or payment of dividends or distributions in
respect of any outstanding securities of Onkyo America, any redemption,
purchase, or other acquisition of any of Onkyo America's outstanding securities,
or any other payments, including the payment of any amounts due on obligations
of Onkyo America to its shareholders except as disclosed on Schedule 5.06(i);
(j) issuance or commitment to issue any shares or other equity securities
of the Seller or obligations or securities convertible into or exchangeable for
shares or other equity securities of the Seller;
(k) indebtedness incurred for borrowed money or any commitment to borrow
money by Onkyo America, or any loans made or agreed to be made by Onkyo America,
or any guarantee, assumption, endorsement of, or other assumption of an
obligation by Onkyo America with respect to any liabilities or obligations of
any other Person;
(l) incurrence of any liability involving $50,000 or more (excluding
liability under purchase orders), or any increase or change in any assumptions
underlying or methods of calculating any bad debt, contingency, or other
reserves of Onkyo America except as disclosed on Schedule 5.05;
(m) issuance of any purchase order, or group of related purchase orders
except purchases of inventory, for an amount in excess of $100,000;
(n) any cancellation of any indebtedness, or waiver of any rights having a
value of $50,000 or greater to the Seller on the Business whether or not in
payment, discharge, satisfaction, or compromise of any liabilities or contingent
liabilities other than the payment, discharge, or satisfaction (i) in the
Ordinary Course of Business and consistent with past practice of liabilities
reflected or reserved against in the Interim Financial Statements or incurred in
the Ordinary Course of Business and consistent with past practice since the
Balance Sheet Date, and (ii) other liabilities or contingent liabilities
involving $50,000 or less;
(o) failure to repay any material obligations, except where such failure
would not have a Material Adverse Effect on the Seller;
(p) contracts, agreements, commitments, leases or licenses (or series of
related agreements with respect to any of the foregoing) that have been or may
be accelerated, terminated, modified or cancelled by Onkyo America or any Person
as a direct result or resulting from execution of this Agreement or the
consummation of the transactions contemplated herein, or
(q) any agreement by Onkyo America or the Sellers to do any of the
foregoing.
Section 5.07. Capital Structure of Onkyo America and Related Matters.
The total authorized capital stock of Onkyo America consists of 9,000 shares of
common stock and 1,000 shares of preferred stock, all without par value. As of
the date of this Agreement, 2,065 common shares are issued and outstanding and
owned beneficially and of record by ONKYO MALAYSIA SDN. BHD., 2,065 common
shares are issued and outstanding and owned beneficially and of record by ONKYO
EUROPE GMBH, and 1,770 common shares are issued and outstanding and owned
beneficially and of record by ONKYO CORPORATION. 100 preferred shares are owned
by the Buyer (formerly named Top Source Technologies, Inc.). All of such shares
have been duly authorized and issued by Onkyo America and are fully paid and
non-assessable. Other than the contingent right of the Buyer to convert its 100
preferred shares into an aggregate of 151.27 new issue common shares of Onkyo
America (subject to adjustment), there are no outstanding options, warrants or
other rights of any kind to acquire any shares of capital stock of Onkyo
America, or securities convertible into, or exchangeable for, or which otherwise
confer on the holder thereof any right to acquire any shares of capital stock of
Onkyo America, nor is Onkyo America legally committed to issue any such option,
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